Govt mulls setting up fund to stabilise biofuel prices

MPI is in discussion of the possibility of setting up a ‘biofuel price stabilisation fund’ to help consumers bear the fuel cost, says minister

By SHAHEERA AZNAM SHAH / Pic By ISMAIL CHE RUS

Malaysia could replicate a fuel stabilisation programme similar to neighbouring countries, by creating a biofuel fund to minimise jolts in global petrol pump prices.

Primary Industries Minister Teresa Kok said the proposal has been brought to Cabinet, but the ministry would revisit it for further discussions this year.

“The Ministry of Primary Industries (MPI) has been discussing the possibility of setting up a ‘biofuel price stabilisation fund’ to help consumers bear the fuel cost when the prices are fluctuating.

“At the moment, we are only presenting our proposal for the fund, but we need to convince other ministries and work together with government agencies to get the calculation right,” she told reporters at the Council of Palm Oil Producing Countries (CPOPC) Business Forum 2019 in Putrajaya yesterday.

“MPI would seek further discussion with the Prime Minister’s Office, the Ministry of International Trade and Industry and other ministries on this proposal,” she said.

Kok added that the fund would be similar to Thailand and Indonesia’s mechanism.

“The idea of the fund is something that Thailand and Indonesia have done, for example, the state oil fund set up by the Thai government.

“The mechanism of the fund is aimed at stabilising the retail price of biofuel and prevent it from fluctuating at greater degree.

Meanwhile, Kok said the ministry is targeting to upgrade the current domestic biofuel consumption mandate of a 10% of palm oil (B10) to a 20% blend (B20) by next year.

“It is a target for the ministry to roll the B20 programme by 2020 for the transportation usage and B10 for the industrial usage.

“As the government has formed the Economic Action Council, we will present to the committee about the implementation of B20 and its benefits to our industries,” she said.

“As mentioned by Prime Minister Tun Dr Mahathir Mohamad at the launch of the B10 programme in December, the country needs to move to B20 as the way forward.

“By increasing the blending percentage of palm oil in the biofuel from 10% to 20%, coupled with rolling out the B10 programme for the industrial usage, we anticipate that the uptake of crude palm oil will increase to 1.3 million metric tonnes per annum,” she said.

At present, Malaysia contributes 27.7% to the world’s palm oil production and 33.5% to the world’s exports.

On the global front, Kok said the ministry’s representatives have met with the European Union (EU) Ambassador and head of delegations to Malaysia Maria Castillo Fernandez on the union’s decision of the phasing out of the commodity.

“The ministry’s secretary general Datuk Dr Tan Yew Chong has met with the EU ambassador yesterday to discuss the final decision of their legislation draft and to understand the content.

“Together with Indonesia, Malaysia will react and respond accordingly to their decision,” she said.

Kok also said the palm oil and trade discriminatory by the EU will be brought up in the sixth ministerial meeting of the CPOPC between Malaysia, Indonesia and Columbia in Jakarta by end of February.

CPOPC ED Mahendra Siregar said the European Commission’s draft, which concluded that palm oil cultivation results in deforestation, sets the wrong precedent as it considers deforestation as the only factor in the environmental protection activities.

“The draft of the delegated regulation confirms the discriminatory nature of the renewable energy directive towards palm oil because it does not accept the achievement or progress of the producing countries other than considering the commodity as high risk in terms of indirect land use change,” he said.

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